I have recently been promoted at my job and the new position requires that I spend quite a bit of time on the road. I need some help understanding the proper procedures and in-and-outs of mileage reimbursements and hoping you can help. Thanks, Anita!

What great news! I love hearing about success stories. Congratulations on the promotion. Many companies have moved away from providing company cars to their traveling employees due to budget cuts and insurance/liability issues. More often than not, employees are asked to use their personal vehicles for on-the-job transportation and in return receive monetary compensation per mile driven or are given a car allowance for renting vehicles.

Each company has the choice to reimburse mileage expenses. There is currently no government mandate that requires what a company reimburses employees per mile. The reimbursement is not only intended to cover the cost of fuel, but also
wear and tear on your vehicle, tires, or engine parts. As a general standard, the Internal Revenue Services has issued a guideline payment for the following businesses:

55.5 cents per mile for business miles driven

23 cents per mile driven for medical or moving purposes

14 cents per mile driven in service of charitable organizations

The next question I often get is where to start calculating the miles driven. I always start from the location of your office. This would exclude any mileage driven on a typical work day to and from your job. If, for example, you are scheduled to travel on a sales call that is 30 miles away from your home but 25 from your office, you will clock the distance traveled from work to the final destination and back. On the other hand, if the site is 5 miles from your house and 35 from your work then you will still start at the office. It is a general rule of thumb that I follow personally.

To make sure you have enough money set aside for maintenance and unexpected automotive expenses, I would deposit the money that you receive from your company into a savings account. Let’s say it is $4.00 a gallon for gasoline and your car gets 20 miles to the gallon on average. This means roughly you will be spending about 20 cents per mile on fuel, leaving you 35.5 cents to cover maintenance costs for your vehicle (assuming your company follows the IRS standard). Do yourself a big favor and put about 70% of your reimbursement into savings. Trust me, you will be thankful you have it someday.

I know we are all trying to save some money at the pump these days. I found a great video with some tips to improving your gas mileage and keeping more money in your pockets. See below!

What are your thoughts on personal vehicle use for business purposes? What are the policies of the companies you work for?

Cool article, right up my alley, I recently came across the same issue. Our issue was with the latter part of your response, where do we start counting the miles from. When flying out to a client, I leave 60 miles from the airport and the office is 72 miles from the airport, which should I charge, you answered it for me. Thank you.

Disclaimer

Anita Clew's blog posts are intended for general guidance and should never be taken as legal advice. In all instances where harassment, inequity, or unfair treatment is believed to be present, please consult your HR Department or legal representation.